The gold price pulled back this week following a New Year rally that has been fuelled by concerns about China’s slowing economy and international political volatility.

Expectations that further interest rate rises are on the way in the US and a strong performance by the US dollar resulted in some losses in value for the precious metal. However, the price of gold has not slipped dramatically; the gold price per troy ounce stood at £755.88 at 10:00 on Monday (11 January) and had dipped slightly to £753.10 by 17.30 yesterday (Tuesday 12 January). This morning at 09:00, gold was trading at £748.24 per troy ounce.

Investors headed to the safe haven offered by gold last week as Saudi Arabia cut diplomatic ties with Iran and North Korea announced it had carried out a nuclear test. But this week, there has as yet been no unnerving international news of the type that typically leads to a gold rally.

Gold generally rises in tandem with oil prices, and dips when the value of the US currency increases. The gold price has obeyed these market trends so far this week, as crude oil fell to its lowest price in 12 years and the US dollar strengthened against the pound.

However, the longer-term picture is impossible to predict accurately. Analysts were surprised by gold’s increasing value last week, after the precious metal had just slumped to its third successive year of declining prices.

The value of gold could now well increase again in the coming months amid concerns about Britain’s economic recovery.

Figures released on Tuesday by the Office for National Statistics showed that UK manufacturing output fell by 0.4 per cent in November and the broader industrial sector’s output was down by 0.7 per cent. The data confounded expectations that manufacturing output would rise by 0.1 per cent.

So, with gold investing – as in every type of investment decision – it’s vital to watch the markets and the economic trends, but also to be aware that unexpected political events can also make a major difference to the value of the precious metal.